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. Last Updated: 07/27/2016

Small Investors Form Club to Protect T-Bill Interests




A group of Russian associations that lost billions of dollars on the defunct domestic bond market formed a club Tuesday to protect their frozen investments.


The group, called the Moscow Club of Creditors, was formed to lobby on behalf of smaller bondholders while the government conducts debt restructuring talks with foreign investors and demonstrates preferential treatment to Russian financial institutions, said Pavel Teplukhin, president of Troika Dialog Asset Management and one of the club's six council members.


"The club will unite efforts of its members to ensure the quick return of debts," Teplukhin said.


The Moscow Club of Creditors will bring together insurance companies, pension funds, unit investment funds, brokerage houses and smaller banks.


It is unclear how much their claim will amount to, given that the organization is just being launched and new members are still joining.


Teplukhin said the club intended to send a formal letter detailing its goals to the government Tuesday, and it was expecting to meet for the first time with Finance Ministry officials later this week.


Since declaring insolvency almost three months ago, the Russian government has neglected smaller domestic institutions in debt negotiations. These investors sank tens of billions of rubles in the domestic bond market. Many were pension funds and insurance companies that were obligated to invest in treasury bills and other state bonds.


Instead, the state has focused on several large Russian banks, which it wants to protect, and nonresidents, which held an estimated $9 billion in treasury bills.


Certain domestic banks, for instance, were allowed to exchange worthless T-bills for new Central Bank bonds, or OBRs. Nonresidents' T-bill holdings have been singled out by government officials for separate debt restructuring negotiations, which have been taking place on a weekly basis over the past month. The next round is scheduled to begin in London on Wednesday, according to the Finance Ministry.